Tech Data still keen on expansion into Saudi Arabia

Tech Data remains keen on in-country expansion into Saudi Arabia during 2006. The distribution giant has concentrated the bulk of its operations within the UAE to date, employing business support managers to provide in-country reach in key markets around the region.

Tech Data remains keen on in-country expansion into Saudi Arabia during 2006. The distribution giant has concentrated the bulk of its operations within the UAE to date, employing business support managers to provide in-country reach in key markets around the region. “We are still involved in some discussions internally and we are also taking some legal advice with regards to getting Tech Data set up as a legal entity within some of the countries that we currently cover in the region — particularly for places like Saudi Arabia,” explained Adnan Al-Falah, managing director at Tech Data’s Middle East operation. “I think if we get to the point where we can address the ownership issue, we can then address the investment and taxation issue as well. I think it would be a very big step forward for both the market and for Tech Data to actually be present in more markets — especially Saudi Arabia as one of the largest markets in the region,” he added. During 2005, Tech Data did recruit business support managers in-country in both Pakistan and Qatar increasing its ability to interact with resellers in these territories. Tech Data also launched its value-added distribution operation Azlan in the region. However, setting up additional in-country stocking points remains a top priority. “You can’t always drop ship into different countries because it is just not possible if the volume is not there, so Jebel Ali gives you a great stepping approach,” said Al-Falah. “We will continue to work along those lines — we look at the volumes as we did for our hubs in Bahrain and Jordan. For the stock to come to Jebel Ali and then move to Saudi Arabia is ridiculous when you think about and consider the size of the market.” Moving in-country and getting closer to the genuine final tier resellers plays a pivotal role in determining a distributor’s ability to build channel breadth. During 2005, Al-Falah claims that Tech Data boosted its regional breadth 20% to in excess of 1,000 active customers. Tech Data defines an active customer as one that purchases at least two months out of three in any given quarter. Tech Data remains committed to building up the portfolio of products available to Azlan in the region and the distributor is currently in talks with vendors active in the network, storage, security and server spaces. Tech Data took third place in this year’s Power List, posting Middle East sales of US$360m for 2005 — a revenue rise of approximately 20% year-on-year. “I was aiming for higher than that but you can’t achieve growth of 50% every year — that is very difficult to manage from a resource point of view,” added Al-Falah. “I see that as a big challenge — recruiting the right talent at the right time and offering them a remuneration package that makes them stay.” Al-Falah also claims that the trade of IT products between Africa and the Middle East — driven by differential pricing policies operated by major vendors — continues to hinder channel development. “We were inhibited on numerous occasions last year because of the movement of products between Africa and the Middle East,” he added. “Good luck to the companies doing this. They got away with it and the vendors turned a blind eye.” “Moving a product from point ‘A’ to point ‘B’ if it is efficient for you and the customer is not a problem. But to take advantage of pricing from the vendors between territories — that is foul play in my book. All the vendors have different pricing for Africa — I know because they have asked me to cover the region,” he concluded.